Answered step by step
Verified Expert Solution
Question
1 Approved Answer
Interpret financial statements for Ecobase For the year ended For the year ended 31 Dec. 2020 31 Dec. 2021 Sales revenue 240,000 300,000 Cost of
Interpret financial statements for Ecobase | ||||
For the year ended | For the year ended | |||
31 Dec. 2020 | 31 Dec. 2021 | |||
Sales revenue | 240,000 | 300,000 | ||
Cost of sales | ||||
Opening inventory (Stock) | 60,000 | 22,500 | ||
Purchases | 135,000 | 240,000 | ||
195,000 | 262,500 | |||
Less: Closing inventory | -22,500 | -172,500 | -37,500 | -225,000 |
Gross profit | 67,500 | 75,000 | ||
Operating expenses | -30,000 | -33,750 | ||
Finance cost | -7,500 | -15,000 | ||
Net profit | 30,000 | 26,250 | ||
The summarised financial statements of Ecobase, a limited liability company engaged in manufacturing, are shown below: | ||||
Statement of profit or loss:Statement of financial position | As of year to 31 Dec. | As of year to 31 Dec. | ||
2020 | 2021 | |||
Non-current (Fixed) assets | 147,750 | 300,000 | ||
Current assets | ||||
Inventory | 22,500 | 37,500 | ||
Receivables trade (Debtors) | 45,000 | 60,000 | ||
Prepayments | 4,500 | 5,250 | ||
Cash | 3,750 | 75,750 | 750 | 103,500 |
223,500 | 403,500 | |||
Issued share capital | 45,000 | 45,000 | ||
Share premium account | 15,000 | 15,000 | ||
Retained earnings | 56,250 | 82,500 | ||
116,250 | 142,500 | |||
Non-current liabilities | ||||
10% loan notes | 75,000 | 150,000 | ||
Current liabilities | ||||
Payables trade (Creditors) | 28,500 | 105,000 | ||
Accruals | 3,750 | 32,250 | 6,000 | 111,000 |
223,500 | 403,500 | |||
Required: | ||||
Calculate the following five ratios for each of the two years: | ||||
(i) Return on capital employed | ||||
(ii) Net profit margin | ||||
(iii) Current ratio | ||||
(iv) Average Receivable days/ Debtors collection period | ||||
(v) Average Payable days/ Creditors payment period |
Step by Step Solution
There are 3 Steps involved in it
Step: 1
Get Instant Access to Expert-Tailored Solutions
See step-by-step solutions with expert insights and AI powered tools for academic success
Step: 2
Step: 3
Ace Your Homework with AI
Get the answers you need in no time with our AI-driven, step-by-step assistance
Get Started